Francis
Chou’s Chou Associates portfolio value increased marginally from $234M to $237M
during the quarter. The portfolio continues to be very concentrated with just
24 positions. Below is a summary:

1. Berkshire Hathaway (BRK.A): The ~19%
portfolio position is the largest 13F equity stake. The last major activity was
a 50% reduction in Q1 2016 at prices between $187,000 and $214,000. The stock
is now at $282,000.

2. JPMorgan Chase Warrants (JPM-WT): The
~5% stake in JPMorgan TARP Warrants was acquired in 2011 at much lower prices.
The position had remained relatively steady since. Q1 2017 saw a ~44% selling
as the underlying traded between $83 and $94 and that was followed with a
similar reduction in Q3 2017 as the stock traded between $82.50 and $95. Last
quarter saw another ~50% selling as the stock traded between $95 and $108. JPM
currently goes for $104.

3. Resolute Forest Products (RFP): The ~16%
RFP position has been in the portfolio since 2010 (Abitibibowater at the time)
and the cost-basis is much higher compared to the current price. Q2 2013 saw a
one-third increase at prices between $13 and $16. The five quarters through Q1
2016 also saw a ~20% combined increase at progressively lower prices between $4
and $19. The stock is now at $10.35. There was a ~7% trimming last quarter.

4. Valeant Pharmaceuticals (VRX): VRX was
the largest position at ~15% of the portfolio as of Q3 2017. The stake was
almost eliminated last quarter at prices between $11 and $22. The original
position was from Q1 2016 at prices between $26 and $102 and increased by ~48%
the following quarter at prices between $19 and $36. There was another ~35%
increase in Q4 2016 at prices between $13.50 and $24.50 and that was followed
with a ~20% increase the following quarter at prices between $10.50 and $17. Q2
2017 saw another ~30% increase at prices between $8.50 and $17.30. There was a
~10x stake increase this quarter at prices between $15 and $24. The stock
currently trades at $23. Chou realized losses and is now building the stake
back up again.

Below
is a spreadsheet that highlights the changes to the portfolio as of Q1 2018.
Please check out our previous update to have an idea on how the
portfolio is progressing: